Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 40-year veteran tax professional Robert D Flach.

Wednesday, July 27, 2016

I have created a newsletter of tax
planning and preparation advice, information, and resources for self-employed
sole proprietors reporting income and expenses on Schedule C, based on my 40+
years preparing Schedule Cs, to help you to pay the absolute least amount of
income and self-employment tax possible for your particular situation.

The newsletter is ROBERT D FLACH’S
SCHEDULE C LETTER.

This newsletter is a great resource
for someone thinking about starting a sideline business as well as the veteran
small businessperson.

Published every-other month, also
included in each issue will be unique forms, logs and worksheets to help
document your Schedule C tax deductions and to help organize and gather the tax
information needed to give to your tax professional.

Future issues of the newsletter
will deal with such topics as -

* THE ONE PERSON LLC

* THE SELF-EMPLOYMENT TAX

* THE HEALTH INSURANCE DEDUCTION

* LISTED PROPERTY

* USING YOUR CAR FOR BUSINES

* HOW TO ENJOY A TAX DEDUCTIBLE
VACATION

* THE HOME OFFICE DEDUCTION

* REPORTING REIMBURSED EXPENSES

* RETIREMENT PLANS FOR THE
SELF-EMPLOYED

* and much, much more

Subscribers will be offered special
discounts on other tax-saving reports throughout the year.

Click here to download a free copy of the
premiere August 2016 issue, which discusses some of my best advice, some truly
bad advice, and putting your kids on the payroll.

A 1-year, 6-issue, subscription is
only $11.95 delivered as pdf email attachment. A print edition sent via postal
mail is also available for $24.95.

To order your subscription send your
check or money order, payable to TAXES AND ACCOUNTING, INC, for $11.95 or
$24.95 and your email or postal address to –

Monday, July 25, 2016

Thankfully, the GOP
official party platform on taxes rejects much of Trump’s alleged policies –

“It endorses a territorial tax system that
Trump rejects. It calls for eliminating special interest tax provisions while
Trump would retain most.”

Here is what the
platform says about tax reform (highlight is mine) -

“The current tax code is rightly the object
of both anger and mockery. Its length is exceeded only by its complexity. We must start anew…. It cannot be
engineered from the top down, but must have a common sense approach, and be
simplified. Wherever tax rates penalize thrift or discourage investment,
they must be lowered. Wherever current provisions of the code are disincentives
for economic growth, they must be changed. We will not divide the American
people into winners and losers. We will eliminate as many special interest
provisions and loopholes as possible and curb corporate welfare, especially
where their erosion of the tax base has created pressure for higher rates.”

Clearly the
Republican policy on income taxes is the better choice.Unfortunately the party’s Presidential
candidate is the worst possible choice ever.

“I can’t emphasize enough that the importance
of seeking out a responsive, competent tax advisor. Even if you do your own
taxes, you may need someone to help you out if you run into trouble.”

If you start out by
using a responsive, competent tax advisor to prepare your returns in the first
place, chances are you will not run into any trouble.You can begin your search for a responsive
and competent tax advisor here.

At the beginning of
the Presidential campaign I said that the most disturbing political development
in my lifetime (I was born in 1953) was the fact that Donald Trump is being
taken seriously as a Presidential candidate.

The most disturbing
political development in my lifetime - I am 62 - is the fact that dangerous,
unstable, irresponsible, and irrational realty television cartoon clown Donald
Trump is the official Republican candidate for the office of President of the
United States.

Let me also repeat
what I have posted in the past –

I very strongly
believe that all Americans who care anything about freedom, democracy, civil
rights, the economy, and the future of the country and the world have an
obligation to publicly denounce and aggressively oppose Donald Trump and his
campaign for the Presidency.

For the sake of our
future this dangerous narcissist must NEVER become President of the United
States!

FYI – Click here for
one example of the hundreds of thousands of people who dangerous buffoon Donald
Trump screwed while lining his own pockets with millions.Is this the man you want in the While House?

Wednesday, July 20, 2016

It is truly a sad day for the
Republican Party, for America, and for the world.

A dangerous, unstable, irresponsible,
and irrational reality television cartoon clown is the official Republican
candidate for the office of President of the United States.

It is an example of the extent of
the “dumbing down” of America.

Donald Trump is the “worst case
scenario” of a person suffering from acute “narcissistic personality disorder”.This disorder controls his
life and makes him quite literally totally incapable of acting intelligently
and rationally.

Trump has said or done absolutely
nothing since entering the campaign that would remotely suggest that he would
make an acceptable President.It is just
the opposite.Everything he says and
does continues to emphasize his inappropriateness for any elected office.

He is, again quite literally, the absolute
worst possible choice for President.From
the beginning of the campaign I have said I would vote for Homer Simpson for
President before I would vote for Donald Trump.Even if Hillary Clinton is really as bad as her worst critics make her
out to be, she is still a far superior choice to reside at 1600 Pennsylvania
Avenue.Nothing would be worse for the
country or the world than if Donald Trump were to win.

While a large percentage of the
“great unwashed masses”, which make up Trump’s core followers, are not
especially bright, it is inconceivable to me that the majority of Americans
will elect this buffoon to the highest office in the country.

America pleasantly surprised me 8
years ago by electing a black man as President.He turned out to be an honest and honorable, if not a particularly
effective (partially because of the incompetence of the idiots in Congress),
President.While I did not agree with
many of his policies, and did not vote for him, I did respect him.I cannot believe that America has fallen so
far in the past 8 years to elect this entitled and self-important racist white fool
to replace him.

I truly believe that there are
millions of intelligent, responsible, and caring Republicans who will not be
able in good conscience to support or vote for Donald Trump.Many have already said they will be sitting
out this election – and will not vote.

But these good men and women should
not just not vote for Donald Trump when there is a legitimate viable
alternative for conservative and Republican voters in the candidates of the
Libertarian Party – former Republican Governors Gary Johnson and his running
mate William Weld.

It is very important that in this unique
election there is a strong turn-out for third-party candidates, like Johnson
for Republicans and Jill Stein, presumed candidate of the Green Party, for
Democrats who oppose Hillary.We must
send a loud message to the Republican and Democratic Parties.

I pray that the majority of American
voters are intelligent and conscientious enough to “just say no” to dangerous, unstable,
irresponsible, and irrational Donald Trump.If not we are all in deep trouble!

Monday, July 18, 2016

"The United States is the only country where it takes
more brains to figure your taxes than to earn the money to pay it." –

former Florida Senator Edward J Gurney

* Tax pros – the
July 15th issue of TAXPRO BUZZ is here!Click here to download.

* In “Tax Expenditures and Oversight” at 21st CENTURY TAXATIONProfessor Annette Nellen discusses the recent
Government Accountability Office (GAO) report on “Tax Expenditures:
Opportunities Exist to Use Budgeting and Agency Performance Processes to
Increase Oversight” (GAO-16-622).Click
here for the highlights and here for the full report.

Annette says
(highlight is mine) –

“It looks at the estimated $1.23 trillion
annual cost of special tax deductions, exclusions, credits and preferential
rates AND how there is basically no
oversight of these costs relative to discretionary budget items.”

According to the
report highlights the $1.23 trillion in tax expenditures distributed via the
1040 is “an amount comparable to
discretionary spending”.

This lack of
oversight is one of the reasons that government welfare and other social
program benefits, like the Earned Income Credit, the refundable Child Tax
Credit, the various educational benefits, the residential energy credits, etc,
should not be distributed via the
Tax Code.

“The Government Accountability Office (GAO)
published a report in May of this year. It found that the program suffers from
a high improper payment rate. For the
fiscal year 2015, they found that $15.6 billion of the EITC’s $68.1 billion in
total payments were considered improper, meaning the filer over claimed or
wasn’t eligible. That’s almost a fourth of the entire program’s payments.

The GAO says that the program’s high payment error is a
result of the program’s complex eligibility requirements.”

Once again the
solution – take the EITC and other federal social benefit programs out of the
Tax Code!

This credit, being
refundable, was, as refundable tax credits are, a fraud magnet when it was in
effect in the past.

As Michael explains
(highlights are mine):

“The original credit was fraught with
erroneous claims, and Congress had to add antifraud protections to the final
extension of the tax break. A report in 2012 by the Treasury Inspector General
for Tax Administration found the
Internal Revenue Service disallowed nearly $1.6 billion in erroneous claims
but said there was likely much more
fraud that could have been caught if the IRS had been given expanded math
error authority from Congress.”

If the idiots in
Congress want to encourage homeownership via subsidies let the subsidy be
provided as a direct government payment at the closing of the qualifying home
purchase.

“With reciprocity, the taxpayer files a
return and pays the tax only in the state where they live.”

So NJ resident
taxpayers who work in PA do not pay any PA non-resident state income tax on
their PA-source wages – and do not have to file a non-resident PA state tax
return.The PA employer withholds (or is
at least supposed to) and remits NJ Gross Income Tax from the PA source
wages.And, of course, vice versa with
PA residents working in NJ.

While this creates
some extra work for the employer, and at times some extra work for the taxpayer
or tax preparer when the PA employer erroneously withholds PA state income tax
instead of NJGIT, I have always liked this arrangement and hope it continues.

“The
Tax Revolution Institute— a Washington, D.C.-based nonprofit that says it
promote ‘justice and integrity in the tax system’—has created a new website,
AuditIRS.com, where it hopes to collect personal experiences from taxpayers
about their encounters with the IRS.”

“Democrats
have suggested that Trump is trying to hide something by refusing to release
his returns. Some Republicans, including 2012 Republican presidential nominee
Mitt Romney, have also said that Trump should release his returns.

Trump
has said that he will release his returns once the IRS is finished auditing
him, but the agency has said that an audit does not prevent taxpayers from
releasing their own information.”

Of course he has something to hide – he
does not make as much as he says he does, and he gives next to nothing
(proportionate to his income) to charity.

“An
anonymous individual has offered to donate that amount to a veterans' charity
if the presumptive Republican presidential nominee will release his tax
returns.

The
inquisitive donor, who wants to keep his identity private, reportedly will even
let The Donald choose the charity.”

THE FINAL WORD

Does this sound
like anyone we know?

“The late Theodore Millon, one of the
co-developers of the Diagnostic and Statistical Manual of Mental Disorders,
devised the subtypes of personality disorders and described the attributes of
the “unprincipled narcissist” disorder as: deficient
conscience; unscrupulous, amoral, disloyal, fraudulent, deceptive, arrogant,
exploitive; a con artist and charlatan; dominating, contemptuous, vindictive.
These personality attributes shape behavior patterns which, in the unprincipled
narcissist, tend toward self-absorbed
egotism. Symptoms include an
excessive need for admiration, disregard for others’ feelings, an inability to
handle criticism, and a sense of entitlement.”

“We are just a few short weeks from when
Chief Birther Donald Trump, an unscrupulous, amoral, vindictive, con man,
sweeps into Cleveland and becomes the
scariest and most profoundly unqualified person to ever be nominated by a
political party in the history of the United States.”

Thursday, July 14, 2016

“The State Budget for Fiscal Year 2017 provides
funding for the Property Tax Reimbursement (Senior Freeze) Program.In mid-July,
the Division of Taxation began mailing checks for the 2015 reimbursement to
qualified senior and disabled homeowners who filed applications by the original
filing deadline of June 1, 2016. We will issue checks as quickly as
possible to homeowners who file their applications between the original June 1 deadline
and the extended deadline of Oct. 17, 2016.

Only applicants whose 2015 income was
not more than $70,000 are eligible, provided they met all other requirements. Residents whose income was more than
$70,000 but was $87,007 or less will not receive checks for 2015. We will
notify them that they are not eligible. Those residents can establish a “base
year” for future reimbursements by filing an application by the deadline.”

So
the cafones in Trenton once again screw seniors and disabled homeowners to
balance the budget.

“Eligibility rules for refundable tax credits
(RTCs) contribute to compliance burden for taxpayers and administrative costs
for the Internal Revenue Service (IRS). These rules are often complex because
they must address complicated family relationships and residency arrangements
to determine who is a qualifying child. Compliance
with the rules is also difficult for IRS to verify due to the lack of available
third party data. The relatively high overclaim error rates for these
credits (as shown below) are a result, in part, of this complexity. The average dollar amounts overclaimed per
year for 2009 to 2011, the most recent years available, are $18.1 billion for
the EITC, $6.4 billion for the CTC/ACTC, and $5.0 billion for the AOTC.”

The
obvious solution to this problem – NO
REFUNDABLE CREDITS!

*
Hey neighbors in Northeast PA – have you seen my new blog WHAT’S THE BUZZ
yet?I provide links to what’s a
happenin’ in the Lake Region and surrounding areas - theatre, entertainment,
community activities, fund-raising events, and a lot more.

“There
are no income tax implications to using coupons, whether you use one or two
coupons or you go extreme and use hundreds of coupons at one time. Coupons
reduce your basis in the things you purchase.”

* Pardon me while I take a break for some
horn-tootin’.Click here to check out my
library of books, reports, and newsletters with federal and state tax planning
and preparation advice, information, and resources.

* FYI - Beginning June 30 and running
through August 30, the Alabama Department of Revenue (ADOR) is offering an
amnesty program for delinquent state and state-administered local taxes for a
3-year look-back period of from January 1, 2012 through December 31, 2014.

Dangerous buffoon Donald Trump will not be
elected President – and I think deep down he knows this.

Trump’s ego demands that he always be a
winner and never a loser.Once he wins
the Republican nomination at the convention, and unfortunately I think he will,
he will be a winner.But after that it
will be all downhill and he can only end up a loser – and I expect a big loser.

To maintain his ego, and his self-perceived
status as a winner, Trump will find some reason to drop out of the race after
his convention win.He will leave the
race while he is a “winner” and maintain his fantasy.

And his dropping out will make all of us
winners as well.

Do you think this is possible – or just
wishful thinking?

Just in case the idiot does decide to run
after the convention - Republicans & conservatives, there is a valid
alternative!

Friday, July 8, 2016

Another recent court case emphasizes
the fact that it is vital that you keep
detailed documentation of your deductions, regardless of what the deduction is.

John
and Lisa Fisher, TC Summary Opinion 2016-10 deals with the deduction for wages paid by a parent’s
company to minor children.

The Fishers were lawyers with three
children under age 9.Lisa Fisher had
her own law practice.

During the summer Lisa brought her kids
to her office and had them do shredding, mailing, photocopying, and answer
phones (to be perfectly honest, I would not have a child under age 9 answering
my office phone or using a shredder).She claimed a total of $29,000 in “wages to minor children” on her 2006,
2007, and 2008 Schedule Cs.

During these years Fisher did not keep any payroll records or issue W-2s to the children. She did not actually give money to the
children, either in cash or by check. The “wages” were paid via contributions to 529
college savings plans for the kids.

The IRS disallowed the deduction, and
the Court agreed because the Fishers did
not substantiate the deduction via proper documentation.The Court could not determine the actual
amount paid to each child each year because there were no records of the hours worked or the rate of pay.

Surprisingly, the Court felt that the
children actually did some work for Fisher and allowed a deduction of $250 per
child per year.

“It
is very important that you “cross your t’s and dot your i’s” when it comes to
documenting a deduction for dependent wages. You must make sure you pass the
“duck test” (if it waddles like a duck and quacks like a duck . . .). Forget
that these are your kids and treat them as you would any other employee.

•
Create a written job description for each position held by your child outlining
the duties and responsibilities involved.

•
Pay the kids on an hourly basis.

•
Use a time card or sheet to document hours worked and work performed.

•
Write a company check as payment each week or every-other week.

•
Even though the wages are not subject to FICA and FUTA tax and possibly state
unemployment and disability contributions, file all appropriate quarterly
payroll tax returns, such as the federal Form 941 (you can indicate that the
wages are exempt from FICA on the form), submit an annual federal Form 940
indicating the amounts paid as “exempt”, and issue a W-2 in January to report
the wages paid.

•
If you have other employees makesure the kids’ wages are included on
the quarterly and annual payroll tax returns.”

As an aside, I have always wondered why
the IRS in their attempts to “control” all tax preparers felt that lawyers did
not have to take any tax test or maintain any tax CPE to indicate to the
Service and the public that they know anything about preparing federal taxes, and this
case is a good example that many do not.

Thursday, July 7, 2016

I am a tax professional who has been
preparing Form 1040s for compensation for individuals in all walks of life
since 1972.As a tax preparer I know
full well that the United States Tax Code has grown into what I frequently
refer to as a “mucking fess”.

The major reason for tax return
errors, by both paid tax preparers and taxpayers who “self-prepare”, is the
excessive complexity of the Tax Code.

The current Tax Code needs to be
shredded and totally rewritten from scratch.

I also strongly believe that the one
and only purpose of the Tax Code is to raise the money necessary to fund the
government.

The new Tax Code must –

(1) Be simple – easy for everyone to
understand.Simplicity for simplicity’s
sake.

(2) Be fair and equitable - treat
all taxpayers equally.

(3) Be consistent – treat specific
conditions, situations, and activities, and maintain specific definitions and
descriptions, the same in all instances.

(4) Encourage savings, investment,
and growth.

(5) Index for inflation all
allowable deductions and credits.

The new Tax Code must not –

(1) Be used for social engineering,
to redistribute income or wealth, or to deliver social welfare and other
government benefits.

(2) Encourage or discourage certain
economic decisions (other than savings, investment, and growth), or provide
exclusive benefits for specific industries, business activities, or classes of
taxpayers.

(3) Contain any refundable credits,
or any phase-outs, exclusions or adjustments based on Adjusted Gross Income or
Modified Adjusted Gross Income.

This new Code would state
“Everything is taxable, except . . .” and “Nothing is deductible, except . .
.”.Only those “excepts” – exclusions
and deductions - that are absolutely necessary and appropriate, in the context
of the “musts” and “must nots” listed above, should be added back.

One of the biggest problem with the
current system is the inappropriate use of the Tax Code to deliver social
welfare and other government benefits – hence its appearance as #1 on the list of
“must nots”.This practice is not only
inappropriate, but it also invites and encourages tax fraud.

The Internal Revenue Service, and
the tax professional community, should not be required to act as Social Workers
and administer and verify government program benefit payments.

I am not saying that the government
shouldn’t provide financial assistance to the working poor and college
students, provide encouragements for purchasing health insurance, making
energy-saving purchases and improvements and other “worthy” actions, .What we are saying is that such assistance
and encouragements should not be distributed via the tax return.

The benefits provided by the Earned
Income Tax Credit and the refundable Child Tax Credit should be distributed via
existing federal welfare programs for Aid to Families with Dependent Children.
The benefits provided by the education tax credits and deduction for tuition
and fees should be distributed via existing federal programs for providing
direct student financial aid. The benefits provided by the Premium Tax Credit,
the energy credits, and other such personal and business credits should be
distributed via direct discount payments to the appropriate vendors or direct
rebate programs funded by the budget of the appropriate Cabinet department.

Distributing the benefits in this
manner is much better than the current method for many reasons:

1. It would be easier for the
government to verify that the recipient of the subsidy, discount or rebate
actually qualified for the money, greatly reducing fraud. And tax preparers,
and the IRS, would no longer need to take on the added responsibility of having
to verify that a person qualifies for government benefits.

2. The qualifying individuals would
get the money at the “point of purchase,” when it is really needed, and not
have to go “out of pocket” up front and wait to be reimbursed when they file
their tax return.

3. We would be able to calculate the
true income tax burden of individuals. Many of the current “47 percent” would
still be receiving government benefits, but it would not be done through the
income tax system, so they would actually be paying federal income tax.

4. We could measure the true cost of
education, housing, health, energy and welfare programs in the federal budget
because benefit payments would be properly allocated to the appropriate
departments.

Wednesday, July 6, 2016

This is a special offer for
self-employed sole proprietors who report their business activity on Schedule
C.

I am offering the following for only $5.00 –

(1) THE NEW SCHEDULE C NOTEBOOK

A compilation of advice, information and
resources for Schedule C filers. A great resource for someone thinking about
starting a sideline business as well as the veteran small businessperson.

The Notebook discusses –

* MY BEST TAX ADVICE

* THE ONE PERSON LLC

* THE SELF-EMPLOYMENT TAX

* THE HEALTH INSURANCE DEDUCTION

* LISTED PROPERTY

* USING YOUR CAR FOR BUSINES

* HOW TO ENJOY A TAX DEDUCTIBLE
VACATION

* PUTTING YOUR KIDS ON THE PAYROLL

* THE HOME OFFICE DEDUCTION

* REPORTING REIMBURSED EXPENSES

* RETIREMENT PLANS FOR THE
SELF-EMPLOYED

* HOW LONG SHOULD I KEEP MY TAX
RETURNS?

* AMENDING YOUR RETURN

It also has my Forms, Schedules and
Worksheets for the Self-employed.You
can use these unique forms, logs and worksheets to help document your Schedule
C tax deductions and to help organize and gather the tax information needed to
give to your tax professional.

Included are –

1. Allocation of Expenses

2. Automobile Expense Worksheet

3. Auto Mileage Log

4. Business Expenses of a Freelance
Writer

5. Business Travel Record

6. Conferences, Conventions and
Education

7. Computer Use Log

8. Election to Deduct Organization
Expenses

9. Employee Expense Report

10. Employee Time Card

11. Home Office Deduction Worksheet

12. Schedule C Worksheet

(2) ITEMIZED DEDUCTIONS GUIDE

A listing and explanation of the
expenses you can claim as Itemized Deductions on Schedule A.

(3) SURFING USA

A compilation useful, interesting and
humorous sites I have discovered during my “wanderings” on the web, including
sections on –

* Calculators

* Just for Fun

* Personal Finance

* Tax Planning and Preparation

* The World of Entertainment

The normal “retail” cost of these items
is $10.95 – so you save more than 50%.

The items will be delivered to you via
pdf email attachment.

This offer will apply to all orders
that are postmarked in July.

Send your check or money order payable
to TAXES AND ACCOUNTING, INC for $5.00 and your email address to –

AIN'T THAT THE TRUTH!

DONALD T RUMP HAS NOT DONE A SINGLE THING THAT IS "APPROPRIATE" OR "ACCEPTABLE" FOR A CANDIDATE OR A PRESIDENT SINCE THROWING HIS HAT INTO THE RING.EVERY SINGLE DAY TRUMP PROVIDES MORE PROOF THAT HE IS AN IGNORANT, SELF-ABSORBED, UNFIT, MENTALLY UNSTABLE IDIOT, AND A DEPLORABLE AND DESPICABLE HUMAN BEING.TRUMP MUST BE REMOVED FROM OFFICE FOR MENTAL INCOMPETENCE ASAP! PLEASE READ AND SHARE THIS - THE TRUTH ABOUT TRUMP'S MENTAL CONDITION

Donald T Rump has not done a single thing that anyone with intelligence would consider “appropriate” or “acceptable” for a President since deciding to run for office.

Every single day Trump provides more proof that he is an ignorant, self-absorbed, unfit, mentally unstable idiot, and a deplorable and despicable human being, who must be removed from office ASAP.

VERY IMPORTANT -

(1) Before contacting me with questions about how a blog post relates to your specific situation, please be aware that I do not give free tax advice to non-clients by e-mail, comment response, or phone. So don't waste your time and mine.

(2) I am winding down my tax practice, and I will not, under any circumstances, accept any new clients. Period. I am actually trying to "thin the herd".